In the first part of this blog, we briefly touched on the long history of trusts in English law and the fact that whilst there may be many misconceptions about them, they are a highly regulated way of benefiting people.
In this second part, we look at some of the specific areas where trusts can be particularly helpful.
One of the main uses of trusts today is in passing assets down to generations, particularly where minors or vulnerable beneficiaries or those not capable of managing their own assets are concerned. A will trust or indeed a lifetime trust can be used to support beneficiaries financially and protect assets such as houses or investments for the long-term benefit of the beneficiaries. Particular types of trust can be used for someone who is physically or mentally disabled, allowing their financial needs to be met but at the same time protecting them from potential exploitation or abuse.
Trusts can also play a key role in complex or blended families where, for example, arrangements need to take into account the financial needs of a second spouse but also the needs of children from a first marriage.
Trusts will also play a key role for families in connection with life insurance policies written into trust so that the proceeds from the policy can be paid out quickly and efficiently to a family.
Trusts are frequently used in connection with education, with parents or indeed grandparents helping to fund children’s education through specific trusts.
Another important area where trusts can be used is in connection with the buying of a home. Typical examples would be where parents or grandparents use a trust to provide their child or grandchild with funds towards a deposit, perhaps in the form of a loan or gift and the use of the trust provides flexibility but also protection in the event of bankruptcy, illness or other unexpected events.
In the context of marriage or divorce, trusts remain an attractive way of providing for children both in transferring assets and protecting a spouse or partner. A trust could also be used to enable someone to remain in a property after a divorce but in the long term, ensuring that the children benefit, thus providing certainty and stability.
As can be seen, trusts have wide application and their flexible nature can be used in a variety of scenarios to balance the needs of different beneficiaries at different times.
Colman Coyle has considerable experience in acting in relation to the creation and administration of trusts as well as advising individual trustees and beneficiaries. If you would like to discuss the issues raised here, please contact Patrick Green on +44 (0)20 7354 3000 or firstname.lastname@example.org.